Are there any hidden gotchas to choosing different fiscal year?


1

I'm setting up a C-Corporation (its Mid October at time of this writing) and planning a Kickstarter project projecting to raise $100k in funds by late November. As I understanding, KS funds are fully taxable funds.

....and with it being nearly end of the year, I would not have the time to spend (ahem, expense) the KS funds before Dec 31st, so I am considering simply declaring a different close (i.e. June) for my Fiscal Year when I establish the C-Corporation.

What should I be aware of before doing this? Any hidden gotchas and/or complications to doing so other than when my tax filing dates are?

Incorporation Tax USA

asked Oct 10 '13 at 04:13
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Michael Lang
16 points

2 Answers


0

If you fall under the definition of PSC (Personal Services Corporation ), you're specifically required to chose a calendar year unless you make a "Sec. 444 election ", if you're eligible. The election is not trivial, and will require certain things from you.

If you're the owner and the main employee of your corporation - you probably have a PSC.

I suggest you get a good EA/CPA licensed in your state to guide you through this. Don't forget that C-Corps are subjected to double taxation at corporate rates (35% flat for PSC ), and there are additional limitations on PSCs.

answered Oct 10 '13 at 04:39
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Littleadv
5,090 points
  • I'm not setting up PSC -- we will be selling a device/invention on the Internet, but sales won't start rolling in until 2014 calendar year, the KS funds would be obtained by Dec 2013, hence the question. Good advice on local CPA (asking mine now) – Michael Lang 7 years ago
  • @MichaelLang I'm not sure how "selling a device/invention" means that it is not PSC. If all the employees are also owners - then it **is** by definition PSC. – Littleadv 7 years ago

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How many investors do you have?

Revenue?

I would highly advise against a C-Corp. Go with an S until you must absolutely drop it, your tax advantages are much greater. Not to mention a lot less paperwork burden. Also you can always revert an S-Corp to C-Corp

For S-Corp you need calendar year, or specially approved tax year, so unless there is an absolute need for change keep calendar year

For C-Corp it's whatever you choose

Also realize choosing a different fiscal year period doesn't change when tax returns are due

You still must pay quarterly

answered Oct 13 '13 at 01:32
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User60812
820 points

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Incorporation Tax USA